Second-Stage Allocation Using the Action Analysis Approach This exercise should be assigned in conjunction with Exercise 8—8. The results of the first-stage allocation of the activity-based costing system at Durban Metal Products, Ltd., in which the activity rates were computed, appear below:

Required:

1.         Using Exhibit 8A—3 as a guide, prepare a report showing the overhead cost of the order for heavy-duty trailer axles discussed in Exercise 8—8. What is the total overhead cost of the order according to the activity-based costing system?

2.         Explain the two different perspectives this report gives to managers concerning the nature of the overhead costs involved in the order. 

Order Customer Product Size Orders Testing Selling Manufacturing overhead: R30.00 R Indirect labor R 8.25 R 180.00 0.00 40.00 0.00 Factory depreciation 8.00 0.00 0.00 1.00 Factory utilities 0.10 0.00 Factory administration 0.00 48.00 18.00 30.00 Selling and administrative: Wages and salaries 0.50 80.00 0.00 800.00 0.00 0.00 Depreciation 12.00 40.00 0.00 Taxes and insurance 0.00 0.00 20.00 Selling expenses 0.00 0.00 0.00 200.00 R89.00 R1,090.00 Total overhead cost R16.85 R320.00